Markets India

India's foreign exchange reserves fell by $4.9 billion to $780.7 billion in the week ended September 11, 2026, as the Reserve Bank of India (RBI) sold dollars to curb rupee depreciation. The decline followed a $2.6 billion drop in gold reserves and a $2.4 billion reduction in foreign currency assets, raising concerns about currency stability.

India's foreign exchange reserves declined to $780.7 billion, marking a $4.9 billion drop from the previous week's peak of $785 billion. The decline was driven by a $2.6 billion decrease in gold reserves to $111.2 billion and a $2.4 billion reduction in foreign currency assets to $645.7 billion. Analysts noted that FCNR(B) inflows pending conversion may have already been swapped, suggesting active management of liquidity. The RBI's intervention to sell dollars in the spot market aimed to mitigate excessive rupee depreciation, reflecting ongoing currency management challenges.

The fall in reserves highlights pressures on the Indian rupee, with analysts warning of potential impacts on investor confidence and capital flows. The RBI's strategy to stabilize the currency through dollar sales may temporarily ease depreciation but could exacerbate liquidity strains in the foreign exchange market. Reduced foreign currency assets could also limit the central bank's ability to respond to future shocks, altering its policy toolkit.

Key stakeholders include the RBI, which faces balancing act between currency stability and monetary policy flexibility, and foreign investors who may encounter liquidity constraints. Analysts speculated on the implications of FCNR(B) inflows, underscoring market uncertainty. The decline in gold and foreign currency assets raises questions about India's capacity to meet external obligations and manage external debt, potentially prompting tighter capital controls.

India’s forex reserves fell sharply, driven by declining gold and foreign currency assets, highlighting ongoing currency management challenges. The exact impact on market stability remains uncertain without further data on liquidity adjustments.

Topics: Forex Reserves, Reserve Bank Of India, Rupee Depreciation, Gold Reserves, Foreign Currency Assets, Currency Stability, FCNR(B) Inflows, Foreign Exchange Reserves

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Source: ET Markets